In an ever faster-paced corporate environment, it is easy to lose sight of the fact that IT is the means to exploit the power of the information economy. “CIOs often get trapped into dealing exclusively with cost reduction and getting used as a corporate punching bag”, says Bob Suh, Accenture’s managing director of growth and strategy. “I would encourage them to punch back.”
A new Accenture survey entitled “IT Investing for High Performance: A Global Survey of CIOs”, shows that IT isn’t holding back the adoption of new technology; rather, it’s businesses saying they’re not ready. “CIOs have some great opportunities to release value from current operations and create value through new capabilities, says Suh. “And now is a great time to adopt an offensive game plan with IT, not defensive.”
Cut Non-Value-Added Wastes …
Thirty years ago, when Taiichi Ohno, creator of the just-in-time production process at Toyota, was asked what he was doing, he replied: “All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes.”1 Rarely can such a deceptively simple-sounding statement have packed so much potential.
… Not Just Cost!
Removing non-value-added wastes to reduce cycle time is a goal that CIOs are in key positions to help deliver. But to do so means breaking out of a behavior that the survey suggests is all too common: being cost efficient and wasting time. Which is to say, cost reduction is not the same as performance— performance is about eliminating low value and redundant work to reduce cycle time.
To illustrate this point, consider two types of IT organizations: high performers and average/low performers. The survey shows that high performers spend 50 percent more of their budget on building new systems than the rest. And they focus 43 percent of new projects on business productivity, compared with only 30 percent for the rest. In fact, low performers spend only 24 percent of their budgets on business productivity.
Transformational Innovation
Bob Suh: “The moral is, how you spend your time is as, or more, important than how much budget gets spent. A lot of CIOs still feel the scars of the dot-com bubble, particularly when it comes to investing in new value-adding capabilities. So, focusing on, say, replacement projects, can feel a lot safer than investing in bold new things. But the fact is, new technology really can deliver transformational innovation. You know, when Mr. Ohno set about his work that was to transform Toyota and the automotive sector, he checked out Henry Ford. What fired his imagination was the fact that Ford was able to mine iron ore on a Monday and use it to make the automobile that came off the production line on Thursday—a hyper-efficient, value loaded game plan!”
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1 Toyota Production System: Beyond Large-Scale Production, Taiichi Ohno, Diamond Inc, Tokyo, Japan, 1978